Start 2016 With This Investing Thought In Mind

Here’s something interesting about investing to me: I think every company listed on the Singapore Exchange can have a great growth story.

For example, this is how we can paint land transport services provider ComfortDelgro Corporation Ltd (SGX: C52) as a great growth stock:

There is a high likelihood that demand for public transport will increase as urbanisation rises in the world. Just think of the possible difference in the amount of travelling done every day between an urban city  like Singapore and a city with large swathes of rural areas like Timbuktu in Mali.

As one of the largest public transportation companies in the world, ComfortDelgro is well-positioned to benefit from the trend of global urbanisation, which has been evident over the past few decades (according to the United Nations, the global urban population has risen from 746 million in 1950 to 3.9 billion in 2014).

As yet another example, here’s how we can imbue Noble Group Limited (SGX: N21) with a compelling growth story:

As the global population increases and the economies of countries around the world improve, the need for commodities, be it food, fuel, or raw materials like metals, will likely experience higher demand.

A company like the commodities trader Noble Group, which has extensive distribution and sourcing networks for a wide variety of commodities, plays an important role in the economy of linking producers and consumers. As demand for commodities rise, so would their traded volume. Noble Group is clearly in a sweet spot to take advantage of this possible trend.

The stories I’ve painted for ComfortDelgro and Noble Group above sound all fine and dandy. However, as investors, we need to be very careful when evaluating the merits of an investment.

I believe I can tell you a great growth story for almost every single company listed in Singapore. Yet, according to a screen I ran on S&P Capital IQ, only 36% of all Singapore-listed shares that have been listed for more than five years have delivered a positive return for shareholders since December 2010.

So, here’s the investing thought you should keep in mind for 2016: A great investment can be found only by combining a great story with great numbers. The next time you come across a wonderful growth story for a company, take a step back and look at its financial numbers. Do the figures match the story you’ve heard?

If they do, maybe you have found yourself a good investment. If not, you might be better off taking a pass on the opportunity. After all, the world is full of opportunities – it is our resources that are limited.

Happy New Year Fools!

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.